to go. >> i'm melissa lee. thanks so much for watching. see you tomorrow for "squawk on the street." meantime, don't go anywhere. "mad money" with jim cramer starts right now. >> he's going to go out of business and he's nuts! they're nuts! they know nothing! >> i always like to say there is a bull market somewhere. >> "mad money." you can't afford to miss it! hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. just trying to save you some money. my job is not just to entertain but trying to coach and teach you how we keep going to those all-time dows. so call me at 1-800-743-cnbc. if you don't build it, they will come. that's right. we have the exact opposite of a field of dreams stock market. don't build anything new, and the profits will come to those

who already have the infrastructure in place. that's really the theme behind much of this market's advance. the undercurrent that plays out every day, including this one with the dow roaring 112 points, yes, all-time high, s&p jumping .78%, almost all-time high. and as that climbing, .553%, let me walk you through my don't-build-it profits come thesis. because that is what's behind this levitation. this morning we heard from the keepers of the case-shiller index that housing prices are up in 20 cities, phoenix, las vegas, miami. these increases can happen simply because the home builders aren't building houses fast enough to meet the demand. you have 1 million new homes coming on stream this year, still only two-thirds of what we would have gotten six years ago and that's not enough supply. given our level of formation, to natural causes like flood, fire,

dill lapdation, they aren't building it so the profits accrue to those few who have the capital to do so. we know this morning's february new home sales at 411,000 that were sold that were still way behind where we should be, and that's because of voracious demand. that's how you get quick appreciation for homes. remember, blackstone, our favorite private equity firm, has a hugetory of homes. i heard people fretting all day that blackstone might get hurt when they go to sell. in fact, the opposite is true. thanks to the dearth of new homes being put up and the need foreign tals, blackstone is making money with its gigantic home collection, rent them, sell them. you would think we could get into the home flipping situation with that appreciation, right? with that kind of double digit advance? 12% in las vegas, 10% in miami. 12% in minneapolis. but unless you are a huge private equity firm with lots of capital, lots of fire power, do you not have access to mortgage money on a second home. and there is no mortgage money for investment property in most

areas, even if you're willing to put down 50%, believe me, i know. the same thing is happening in the hotel industry, as you'll hear later from ash ford hospitality, a big investment trust that has seen its per room go up in the high single digits. why? simple. because the industry is not building. they're not putting in new capacity. there's not enough credit, too much worry about the last downturn. so you have good pricing all over the place for the existing stock. it's a reason to like winn, mariott and store. the essence of the rally in the airlines which i think again will be a multiyear move also comes down to a lack of supply. nobody is building out of airports. you can't get any new planes any time soon, given the huge global demand for them. so usairways, united continental, delta, spirit, don't have to worry about willy-nilly competition. the first time i can actually recall that being the case. hence the first time i've recommended these stocks. that's why i expect the profits to come in for usairways when it

completes its merger with amr. capacity takeout just when you expect additional planes and routes to come online. i can't wait until "squawk box" tomorrow where the ceo of usair is going to come on. i bet he comes with my thesis that nobody is building so the profits are coming. don't build more cars, the profits will come, the heart of the rental car business. the consolidation is immense. the price increases are bounceable. if it weren't for hurricane sandy, pricing may not be that tight but getting a rental car is difficult because of capacity restraints. how can you not to want to own hertz. don't build it and the profits will come to the refiners. the profit margins were so horrendous for so many years and the competition way too vibrant. but there hasn't been a new built in this country for many years, many taken out of service, environmental issues. and we produce so much oil in north america, that many buy it here, sell overseas.

lack of new capacity. and arbitrage between cheap domestic oil and expensive foreign gasoline. don't build it and they will come. isn't that how sha near energy, lng are able to levitate. these two long-time "mad money" recommendations i cannot believe how long i've been flogging these have been busting out because it looks like the lobbying effort is succeeding and that means sha near is going to have a virtual monopoly the export of our domestic gas because they were first. the amazing signing up of contracts by suky continues and the profits will be gigantic once the buildout is completed. my hat is off to sharif suky. here is the catch-22. don't build it and the profits will come situations. there is so little new construction of anything, we get no hiring. because we have no hiring, we aren't getting to get the growth we would normally expect from the economy at this stage in the recovery. and a retrenchment in most spending.

that will curtail growth. and we have a serious worry in how much it will cost people to hire with the new employment obamacare laws. we don't have enough small business formation to offset the constant streamlining of every large business i know. ask yourself which companies are hiring aggressively. i can't think of any. so we don't get the bountiful gross domestic product numbers we might expect and we end up simply paying more for companies that can charge higher prices than we thought. at the same time, we pay less for companies to rely on foreign sales unless they're defensives as the drug companies which hit an 11-year -- highs can show you. it seems we will pay anything for the staples like coal gate and bryce total myers because they too build more with less. they build very little and the profits keep coming and coming and coming. and this catch-22 situation benefits so many different equities. as long as we don't build it, the fed will keep flooding the zone with money.

at this saern point the factories will have to be built. at a certain point the companies that can use our new-found cheap energy, the chemicals, fertilizers and steels, except for nucore is down there and dow has done that, will move to where the natural gas is cheapest. they'll go to east texas and louisiana, ohio and pennsylvania. they will build up new plants like dow and nucore. it hasn't happened yet. when it does, when the building starts, the profits will actually be deluded and the fed were curtail its monetary policy, it's been so good for the stock market. it's just that with the catch-22, no one seems willing to take the plunge to start building or get the credit to do so. here's the bottom line. we've got a zero sum game going between employment and profits which means fewer people hired, the more money it has made in the stock market. so we hum along, just like this. and the market loves it. as long as we don't build anything, and the profits keep bursting through the expectations for the bottom line. don't build it. the profits come.

robert in virginia. robert oh. >> caller: mr. claim e a big northern virginia boo-yah. >> loving that boo-yah to start the show. what's happening? >> caller: i'm a 25-year-old new investor, and my question is about huh vannian homes, hov. with the case-shiller out, what are your thoughts about it now and in the long term? >> i happen to be a best of breed guy. and i've got to tell you something real bear, i'm going to encourage you to be in a similar state of mind which means you want to be in toll brothers, which is high end, or you know what, lennar, which just reported a spectacular quarter. pulte at 20. they are all superior, those are better than owning hovnanian. stephanie in california. stephanie. >> caller: hi, jim, great to talk to you. >> same. >> caller: my question for you today is about boeing. there's been some negative news about the 800 layoffs, as well as positive news regarding the dreamliner's successful test flight. taking all of this into consideration, where tongue boeing stock is heading?

>> i think to par which is genuine wall street gibberish for 100. here's how i get that. i say anyone listening knows i put my faith in boeing to fix this problem. they're going to fix it faster than anybody thought and that's exactly what happened. in the meantime, you cannot get the planes. the line is that lang for the planes and that's why i think boeing is in the middle of a major saying he will that will go on for years and years. i wish my charitable trust owns boeing. it doesn't. built of dreams? uh-huh, not quite. more like if you don't build it, they will come. meaning the profits. and, of course, now, of course, the stock buyers. companies with existing infrastructures are aren't driving in this environment because no one is building, and that just makes it so the profits flow right to the bottom lines of the companies you're buying. "mad money" will be right back. coming up. sink or swim. few stocks have been hit harder than the shippers. but could the tide be about to

turn for the most sea worthy? tonight, cramer is wading into the group to find out. in a special nautical edition of "off the charts." and later, bill of health. all week, cramer's checking out the cutting-edge science behind some of the biggest players in the biotech industry. tonight, a company forming a pipeline to fight devastating diseases. is it time to get behind their efforts. plus, extended stay. from beverly hills to the sun-soaked florida coast, ashford hospitality trust owns rooms with a view across the country. as travel spending continues to increase, could it provide the perfect accommodations for your cash. cramer talks with the ceo. all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question, tweet cramer #madtweets. send jim an e-mail to "mad

money"@cnbc.com. or give us a call. 1-800-743-cnbc. miss something? head to madmoney.com. ♪ ♪ i don't want any trouble. i don't want any trouble either. ♪ [ engine turns over ] you know you forgot to take your mask off, right? [ siren wailing in distance ] ♪ [ male announcer ] introducing the all-new beetle convertible. now every day is a top-down day. that's the of german e.

[ male announcer ] with citibank it's easy for jay

to deposit checks from anywhere. [ wind howling ] easier than actually going to the bank. mobile check deposit. easier banking. standard at citibank. makes it easy for anne to manage her finances when she's on the go. even when she's not going anywhere. citibank for ipad. easier banking. standard at citibank.

after years of getting hammered, it's looking more and more like the shipping stocks are finally making a big comeback. a came out here a week and a half ago to lay out the fundamental case for the dry bulk shippers, led by best of breed, diana shipping. but this is really a case where the stocks got hammered so hard, that they frankly couldn't get any lower. and now that things are starting to get better, they're roaring back with a vengeance in large part because all the weak hands have been washed out after years and years of declines and there's an ocean of skeptics who can be converted from bear to bull. in other words, if you want to understand this movement of dry bulk shipping groups, a group for trade, iron ore, coal and grain, then you've got to look at things from the technical

perspective. that's why tonight we're going off the charts to diana shipping, the best of the dry bulk names, according to our own analysis, is heading. with help of dan fitzpatrick, my colleague at the street.com. fitzpatrick likes diana because it's broken out from a huge, long-term down trend and it's now very much in bull market mode to the point where any pullback should be used as a buying opportunity, not a reason to freak out and sell the darn thing. believe me, the chart is driving the action here, everybody. it is. until the fundamentals kick in. as is so often the case when stocks are bottoming. the chart bottoms ahead of the fundees. it happens over and over again. first off, take a gander at diana's weekly chart. you can see this stock has been locked into a multiyear down trend, going all the way back to 2008. this is a sickening downtrend. compare this to clorox and kimberly-clark or something. this is where the 40-week or 200-day minimum average represented a strong ceiling of

resistance that kept diana shipping down the whole way lower. fitzpatrick points out that the final washout for the bulls happened back in late july of last year. this is when diana bottomed. right then. i mean, when you take a look at july -- i'm sorry, july of last year -- yeah, that's right, that's right. and what happened is that right in this area, is where -- well, let's just say i'm getting ahead of the story. you'll really like this. the stock made what is known as a dragonfly doji. dragonfly doji -- i'm not kidding! that was in the last week of july. right there. this is a rare candlestick reversal pattern that happens during a down trend. in a dragonfly doji, as opposed to an emoejy, which happens to be my second language, you have a week where prices range very widely, okay?

diana's case during this week, they ranged more than 13% from the low to the high. one week! the stock opens the week at the top of the range. then the bulls capitulate, sending it much lower simply because they can't take the pain. but then it gets so low that traders realize, it's too low, and they start buying the stock aggressively. pushing the price back up to where it began the week. with diana, the stock started that week at 6.75then back to $5.89 where it played the goddess of pain and closed the week once again at 6.$6.75 wher she became the goddess of bear hunting. fitzpatrick says that was the point where diana could not go anywhere lower. and from then on this stock has been printing higher highs and higher lows for months. the stock just ground away. okay? trading sideways, light volume oh, there's the low,ight volume. low volume base going on here, okay? see that, not a lot of volume. and fitzpatrick says that no one

really cared about diana. while that was happening, the 40-week moving average, that key resistance level, was moving lower and lower. then when diana finally broke out above its 40-week moving average, that's the blue line, on january 2nd, the stock sushlg surged 17% in a single week! holy cow, that's it -- that's what it is. since then, diana has been roaring higher. stock is now testing its last high, mid february of 2012. so you go back and take a look. fitzpatrick says that's the new ceiling of resistance, a move above this level will mark the first higher high since early 2009 when it happens the stock could catapult higher again, but for now diana's stock hanging below this $10 range. okay. now check out -- let's go. let's go to the daily chart, all right? here. here you can see much more clearly at the big bullish turning point for theck was back on january 2nd when diana

closed above its 200-day or 40-week moving average. broke out above its resistance trend line, and perhaps more important, the shorter-term, 50-day -- that's the blue, okay. short-term 50-day moving average, crossed above the 200-day. that's called, yes, a bullish crossover. and it tells you that a stock's short term trajectory is positive than its longer-term trajectory and we live for that. meanwhile, back in november -- go back a little. the 50-day moving average began acting as a floor of support for diana shipping. this is textbook, people. it is textbook of what's going to happen before a gigantic move. and right now the 50-day marks the low end of the stock's current trading range, and fitz thinks any pull back would be an excellent buying opportunity and god send. last week after trading sideways for a month and a half, diana roared 20% higher before peaking thursday. glad we got this out before telling people to buy it. and it did so -- look at this,

heavy volume spike. remember, when dealing with the charts, volume is like a polygraph, it's tell you this move is the truth! however, when you see this kind of massive move and the stock runs up against long-term resistance which is what happened to diana, fitzpatrick says that usually leads to selling, once the demand is satiated and traders start taking profits and that's exactly what we're seeing now. stock down 5.7% today. people are saying hey, get me out. that's perfect. this kind of pullback is exactly what fitzpatrick is looking for. this is the buyable pullback. if the stock sells off down to its 50-day moving average, about $1 below where it is now, fitz says that would be even better. guys, listen to me, okay? this is the set-up. right here is where you pull the trigger! on the other hand, diana could turn on a dime and start rallying even tomorrow. so fitz doesn't think you should wait to start. once the stock breaks out above its february 2012 high of 1063,

fitz believes it could be smooth sailing to $14. i need you in that move. that's the next ceiling of resistance, coincided with the 14 bucks. 40% of where the stock is now. my view. you know i believe the dry bulk space has begun to turn the corner. realmoney.com has been pushing it endlessly. the bulk dry index, these ships companies with charge for the vessels has been climbing since the beginning of the year. down since last night. diana shipping is the strong jest player with the best balance sheet and ability to ship now when at their cheapest. many of the others i would like to mention are too small. i can't mention them on the show but they are flying too. so here's the bottom line. after being a complete bow wow, a total dog for years and years, diana shipping is now having its day. the technicals is interpreted by dan fitzpatrick indicating the stock could pull back from here so you might want to wait for that. but if it does, you've got to buy it. because he thinks diana shipping is a $9 and change name headed

to $14. that's in keeping with my view that this group is back. and for speculators, just speculators, it might be, along with the airlines and the mortgage insurers, the best place to play this market right now. after the break, i'll try to make you more money. coming up, bill of health? all week cramer is checking out the cutting-edge science behind some of the biggest players in the biotech industry. tonight, a company forming a pipeline to fight devastating diseases. is it time to get behind their efforts. announcer: where can an investor

be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: scottrade- proud to be ranked "best overall client experience."

[ male announcer ] this is a reason to look twice. the stunning lexus es. get great values on your favorite lexus models during the command performance sales event. this is the pursuit of perfection. at a hertz expressrent kiosk, you can rent a car without a reservation... and without a line. now that's a fast car. it's just another way you'll be traveling at the speed of hertz.

i realized this today. back in the 1990s, the big phrma names, stocks. they weren't synonymous with safety and defense and dividend yields like they are now. they were actually synonymous with growth. at that time, the major drug companies were innovation factories, constantly churning out new and better drugs. and best of all, they traded like growth stocks. these days, merck and pfizer trade at 11 and 12 times respectively and dividend factories. back then they traded 40 times earnings with meager dividends. i mention all this, because even though the housian days of big phrma may be over with the blockbuster drugs of the '90s having gone generic and the stock trading on fixed income vehicles, there's a group of

stocks right now that remind me of the big pharmaceutical companies 15, 20 years ago. i'm talking about the large-cap biotech companies that are bursting with innovation. companies that have terrific pipelines full of new drugs with enormous potential. i think these fast-growing biotext have the potential to be the next big phrma stocks which is why i'm highlighting them all week. last night i told you about cramer-fave celgene! celg. and tonight i've got another one for you. it's gilead. gilead sciences, gild. treats hiv out there. and also developing game-changing new drug to treat maybe one of the most aggressive and horrible illnesses on the planet. which is hepatitis c. i last recommended gilead on september 12th as the company with the best chance of dominating the hepc market and since has gone 51% higher going up practically in a straight

line. the stock has taken up semi residence, it's a squatter. even up here, i think gilead is not that expensive. why? because it sells for just 16 times next year's earning estimates, despite having a 26% long-term growth rate. consider it once again one of these stocks that's so cheap that when it goes up, people are saying, ah, you know what, i could see buying that. for instance, gilead -- did you know that is cheaper than bristol-myers, which sells for 18.7 times next year's numbers? i like bristol-myers a lot. own it for my charitable trust. totally dig that 3.5% yield. hey, so do you. but gilead is growing its much faster, three times faster than bmy. that's ridiculous. gilead deserves a higher multiple. if it traded 20 times extra, it would be 23% higher than now and still be inexpensive on a growth basis. hey, why am i so confident about this one? let me count the ways. first, there's this company's hepatitis c virus or hcv franchise.

for those of you who don't know hep-c is a nasty chronic liver disease that can cause sore oh owesis, liver failure and cancer. in the united states alone, 4 million people suffer from hep-c this is not an orphan drug. 4 million, 5 million in europe. it could be as high as 200 million people. as many as 13 million people die every year in the united . it's also responsible for the majority of liver transplants. so this disease is a serious global problem and as much as i hate to say it from a drug company's perspective, it is a huge opportunity. right now there are treatments for hepatitis c on the market, but they have horrible side effects and only work some of the time. if you get this terrible disease, you need to take a combination of interfeern injections for 24 weeks. that's half a year. sometimes even a full year. those drugs can cause severe side effects giving you chills, making you feel like you have a fever. but you still have to keep taking them for week after week. at the end, the current standard of care only cures the hep-c

patient 50 to 60% of the time. so you go through a lot of hassle, a lot of mystery for six months and ultimately whether you're cured comes down to a coin toss. however, there's a whole new generation of hep-c drugs in the works and gilead has become the leading contender. yesterday the company won the first phase of its patent dispute with eiden i think so with the patent office determining gilead was the first to file a patent. this is a hard drug to make. bristol-myers had to write off a gigantic acquisition it made to try to conquer hep-c. killed someone. the drug is light years ahead of the current standard of care. gilead's drug can be taken orally rather than injected. second, only have to take it for half as long, 12 weeks, not 24. and third and most important, based on the trial results so far, patients who use the drug have a higher chance of actually being cured. anywhere from 78% to as high as

100%. when use used in combination with other hepatitis c treatment that the company is developing. so far, gilead has completed four phase three clinical trials. and the company can is expected to file for fda approval for a certain subset next quarter. based on the data we have seen, i have very little doubt the fda will -- not just rush this one. and it should hit the market by the middle of next year. gilead also has additional phase three trials going on, studying this in combination with a second hepatitis c drug gilead is developing that is interferes with the ability to replicate itself. gilead got into the hep-c game when it acquired farm aset in january of 2012. it was a stunning acquisition. many people ridiculed the company. why? because they paid $11 billion. because it was a gigantic 89% premium to where phrmas had been trading. peel just snickered, thought gilead overpaid. the stock took a 9% hit the day

the deal was announced. but now it's looking like gilead's franchise could be racks up as much as $7.8 billion in annual sales by 2018. if anything, it's clear, gilead dramatically underpaid. they were just visionaries. boy, that makes me like them. even more. one more point about this hepatitis c business. so far, gilead's management hasn't spent much time talking about their drug. they have been very quiet, nonpro promotional. gilead said, and i quote, once we get through the regulatory filings and into the middle of the year, guess what -- not quote, guess what's coming soon. back to quote. we really start to take up the commercial activities. then i think we would be able to share some quite interesting information we're starting to gather on the whole dynamics of hcv. not just in the u.s. we're doing some really good work in europe, as well. so we'll start to share that with you as we get into the middle of the year, end quote.

in other words, not far from now. sometime next quarter. gilead's management is going to get a lot more promotion about this wonder including and could act as the terrific catalyst. gilead has a core hiv business, already the leader in hiv drugs, really expensive. because really, what's the alternative? thanks to the cocktail medications developed by gilead and others, like it, hiv is no longer a death sentence. just last august the company got fda approval for the quad, which is four of gilead's hiv medicines combined into a single pill. by 2017, the quad could do $3.8 billion in sales in the united states and another $1.6 billion in europe. gilead could have many more hiv drugs, cancer treatments, leukemia drug in phase three development and a mild low fibrosis drug that should interface three studies in the second half. what a stock. here's the bottom line. gilead, the company, reminds me of the big phrma outfits in

their 1990s heyday. you come in, merck would be up 6 and then 3 and then 7 and then close for the weekend. what can you do, didn't trade saturday. opened up 10 monday. yeah, check out that chart in '86, '87. gilead has a robust pipeline and game-changi game-changing hiv drug. gilead the stock has slow-growing names that we're familiar with phrma today, cheaper, even though it's a rapidly growing biotech. this stock may have room to run. i think it deserves to go much higher. chris in california. chris. >> caller: hey, jim. i've been watching mankind corporation stock for a while. they've had some great medical products in the past. and they're currently awaiting an fda approval for an insulin delivery system that would eliminate injections. any thoughts here? >> yeah, to serve mankind, it's a cookbook. no, i don't want you in mankind. i'm talking about the highest level kind of drugs here. i'm talking about bristol-myers

and gilead gore growth. we don't need to go down the food chain to mankind. let's go to joe in florida. joe. >> caller: hey, jim. this is a big florida boo-yah to you. >> good to have someone from florida on the show. what's happening? >> caller: i'm asking about aveo. how is everything with you? >> you know, i love this company once before because it's been down and out, not done well. but i know from some of the things that came over, i'm watching the tape in the morning. see the stocks are down $3 and $5 stocks. i'm doing some work on aveo before i opine on it, just in case it's one of those baddees. we'll be back. anyway, the biotechs, roaring here. all week we're talking about the big biotechs. next week the little guys. innovation, growth. first we had celg, also known as celge celgene. then gild, gilead sciences, game-changing hepatitis drug. i think it goes higher. don't move. "lightning round" is coming up next. [ kitt ] you know what's impressive?

a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪

it is time! it's time for the lightning

round on cramer's "mad money." what's that about? is i tell you whether to buy or sell. my staff prepares the graphics on the fly. when you hear this sound [ zzer ] the "lightning round" is over. are you ready, skedaddy? time for the "lightning round" on cramer's "mad money." i want to start with denny in missouri. denny, show me. >> caller: boo-yah, jim. i enjoy your show very much and i'm a long-time viewer. i have two stocks in question. and i don't know which one is more worrisome. i guess we'll go with -- s-a-n. >> been there. here's the problem. after what the europeans did to the cypriots, these banks have become a free fire zone. got to let this settle out. spain needs to ask for a bailout. they can't win for losing over there. i want to go to andy in new york. andy. >> caller: hey, jim, how are you doing there? >> how about you, partner? >> caller: i'm doing okay. i was calling to get your views on ungn, just the uptick in the

natural gas industry. >> i've got to tell you, i don't like the ung. in the book, "getting back to even," i talk about exactly why i don't like that instrument. if you do like natural gas, i can send you to a bunch of natural gas companies that i think are much better. you can do -- you can can do anadarko, conoco if you want some yield. paul in florida. paul. >> caller: jimmy. boo-yah from sunny florida. >> nice. >> caller: i'm a long-time viewer and first-time caller. i get most of your shows. three weeks ago my stock is nuance. you talked about it and i didn't watch the show. >> i don't like voice recognition. maybe this is just a legacy of my friend herb greenberg's work on this group. i don't think it gets any gross margins. i'm not a buyer. tom in ohio. tom. >> caller: bbbb boo-yah, cramer. tom from cincinnati. >> yo. getting ready for the reds. what's up?

>> caller: how about agnc? >> i see you agnc and i raise you with anna-lee. got it going. and can i say that die mera, cim, part of the street.com. that is i think also a buy. that's what you want to be at. i need to go to john in florida. john. >> caller: yeah, hi, jim. john k. in florida. a loyal viewer of your program. and i just want to say congratulations on your eighth anniversary. >> thank you. >> caller: the stock i'm interested in is mow vatto, mov. >> yeah, pretty good. i like the luxury goods but i just saw a good number from tiffany and if i think if tiffany pulls back that i like that more, because tiffany is getting its groove back and that's what matters. and that, ladies and gentlemen, is the conclusion of the "lightning round"! >> the "lightning round" is sponsored by td aamerica trade. ♪ [ cows moo ] [ sizzling ]

mo america trade.unde] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. [ female announcer ] what if the next big thing, isn't a thing at all?

it's lots of things. all waking up. ♪ becoming part of the global phenomenon we call the internet of everything. ♪ trees will talk to networks will talk to scientists about climate change. cars will talk to road sensors will talk to stoplights about traffic efficiency. the ambulance will talk to patient records will talk to doctors about saving lives. it's going to be amazing.

and exciting. and maybe, most remarkably, not that far away. the next big thing? we're going to wake the world up. ♪ and watch, with eyes wide, as it gets to work. ♪ cisco. tomorrow starts here. after a day where the market roared higher, dow in all-time high territory, let's not totally forget about the need for capital preservation. you still need something in your

portfolio with a b-i-g yield with the ability to raise higher. that's why i want to introduce you tonight to ash ford hospital trust, ahd, they've been working so well in the business of owning hotel properties across the united states. 122 hotels, mostly upscale locations under the marriott, hilton, hyatt, starwood and intercontinental brands names. we know the lodging has been on fire lately. look at the strength of the starwood or marriott as a defensive way to play this trend, 3 to 9% yield. for the most part, the cash they generate peaked back in 2007. but they believe the industry can exceed those numbers as they move further into the recovery and if that happens it will be very good news for ash ford share olders. they paid 21 cents a share, had to discontinue in december 2008. only reinstated some dividend in february of 2011. now ashford pays a 12% quarterly dividend. they generated 39 cents in funds from operations in the latest quarter and that's the equivalent of earnings.

to raise back to where it was in 2008, the stock would right now at this price have a 6.9% yield. i think ashford could be headed in that direction especially since the revenue per room, was up 5.3% for all hotels in continuing operations. plus the company has a history of making smart acquisitions. let's check in with the founder and ceo to learn more about the business and where it is headed. mr. bennett, welcome to "mad money." >> thanks for having me. >> okay. first, throughout all of your writings, there is a theme. and the theme is that the private market value and the public market value of hotels is quite different, and that the public market is not getting the credit for the value of the hotels. how do you explain that, and how do you change that so that it isn't like that anymore? >> that's exactly right. over the past couple years, the private market of hotels has moved up in value. but the public market value of hotels has not moved, except for the past few months or so.

and so there is this disconnect between private market value and public market value. for example, we traded about 12 times 2013 ebitta. if our hotels were sold off privately, that number would be closer to 13 times, just how the private market is trading. as far as what to do about, it's coming on shows like yours, jim, and getting the word out this value discrepancy exists. because these discrepancies don't last for long in the public markets. they're efficient and price them away. >> i'm sure because you have a lot of pride in your company and major insider position and a lot of insider buying that one day you long to get back to that yield that you had, the dividend you had before the great recession. is that a reasonable goal for someone thinking about buying ashford to expect, over not this quarter, next quarter, but over time. >> we would love to get that dividend back up to where it was. we own 21% of the stock, were huge shareholders in it, and therefore the dividends are very important to us. we didn't like the fact, though, that we had to cut the dividend

back during the downturn. so we're just much more cautious about raising the dividend now. as you stated earlier, we've got the capacity to raise the dividend, but for now, we're going to raise it modestly, at least our current thinking. >> okay. now, there is a series of -- going over your corporate structure, a little difficult to understand. you've got a couple of preferreds. preferred a that has kind of a high coupon. you have a preferred d, and these are from 2004 to 2007. and they are high-coupon. why not call them in, lower the cost of dead and immediately boost your earnings power? >> we could do that. but in order to do that, would have to issue equity. and we think that those equity values, the common, is mispriced compared to the common market so would have to be issuing common at prices we wouldn't be happy about in order to call in that preferred. >> why not just go to a bank and you can't go to goldman or citi who is your banker and say, listen, we want to call that and refinance. >> we could take on more debt,

but that's not in our game plan. we think we've got enough leverage and we're not looking to increase our leverage. in fact, over time, we would like to take it down. >> you wouldn't be taking on more debt if you called the preferred. it would be one for one. >> i guess that depends upon how people look at debt versus preferred. some people see preferred as debt, some people see it as equity. we see it as closer to equity than debt, because of the provisions that they're to paetz. >> i'm sorry to beat a dead horse. we've had every investment trust on and all they have done is lower the coupon dramatically and come on our show and say this is why we want to come on your show. does someone own the preferred that's in the company? >> no. no. very few of us owners own much of the preferred. we own mostly the common and are very excited about the common's prospects. but the preferred, we think we're going to leave it where it is for now, because even though it's more expensive than the debt we might take on, we are happy with the soft pay nature of it. so we're happy with where that

is. >> american reality capital came on, and they decided they had done a hostile takeover of another outfit they think is undervalued. you already did a huge acquisition, this highlands deal, $1.28 billion. are there other deals like that out there that could be had or -- because the business has turned so much, there's no more easy pickings? >> we would love that highland deal. we closed on it about it two years ago. and we started working on it a year before that. but we've got into that deal in a very unique way. what happened is that we were a lender in that transaction, and then during the downturn, the borrower had trouble hitting debt service. so we worked into a consensual foreclosure with the owner. and that's how we took over the ownership at a great price point, at a great point in the cycle. as far as other deals like that out there, that's going to be tough to say. we are about 40%, 50% of the way through this up cycle in the industry. we bottomed out in 2009, 2010. we're on our way back up.

and as values start to move back up, those great deals are harder and harder to get. the good news is, though, we bought this great platform in highland hospitality, 28 great hotels, well diversified like the rest of our portfolio and putting capital into these assets and increasing margins and building revenues and we're very happy with the direction they're taking. so we think that we'll do very well with that. as far as other deals like that, we're looking, but they're going to be hard to come by. >> excellent. okay. that's monte bennett, chairman and ceo of ashford hospital and trust. thank you very much, sir, for coming on "mad money." >> thank you, jim. >> okay. these real estate investment trusts have been good. like to get them when they have a yield above 4. that's why i think this might get interesting. you under understand there is not a lot of building going on so the hotel business remains a good place to be. monte bennett, ceo of ashford. stay with cramer. hotel business

place to be. monte bennett, ceo of ashford. stay with cramer. carfirmation. only hertz gives you a carfirmation. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the speed of hertz. it's not what you think. it's a phoenix with 4 wheels. it's a hawk with night vision goggles. it's marching to the beat of a different drum. and where beauty meets brains. it's big ideas with smaller footprints.

and knowing there's always more in the world to see. it's the all-new lincoln mkz.

the alternative universe is sometimes too hard for this guy to comprehend. i can't figure out which is right. the public market or the private one. because both can't be right at the same time. and that's really but the dell deal is about. the dell deal, with multiple suitors now. it's -- well, dell is a company in secular decline. while it has bought a series of companies, meant to make the company more of a consultant with hardware and then a pure

personal computer play, the strategy has not brought dell the growth it was expecting. margins, down. cash flow, down. earnings, down. revenues, down. plus, let's face it. dell doesn't have social, mobile, cloud. it's just a 1990s tech company using the parts that everyone else has, right. microsoft software, intel processors, whatever drives are cheapest at the moment. there's very little value added, despite michael dell's endless attempts to be a service company than a hardware company. the success is in government. and that's a terrible thing to be lever to right now. universities, too. ooh, not so hot. plus, big european exposure. ooh, no thanks! so when the stock kept going down and down and down before michael dell's original proposal took the company private, it seemed like a perma short, except for its nicel balance sheet that could be used to make more acquisitions to try to slowly reposition the company. we all know michael dell had talked about taking his company private and if it got too low.

and i guess 8 bucks where it bottomed was too low. but the beauty clearly in the eye of the beholder here and i figure only michael dell would seriously entertain the motion his company would be beautiful to many. hence, why i thought there was no way this was going back to the mid teens on its own. i figured he's a billionaire, building a company can. but does michael dell believe he can do more things privately to make his company stand out than publicly? he's willing to sacrifice forever to build value and has not succeeded. will being private make him more likely to succeed? beats me. that's why i felt the stock was correctly priced at 10 bucks a share and no more than that. so now dell makes the bid, okay. and incredibly two other smart deep-pocketed people want in. to me this seems, frankly, insane. in my view, it makes sense if there is a personal angle, if these guys hate michael dell and determined to make him way up for his own company. surely they don't mean to actually buy it, do they? which brings me back to the actual question, how did dell be worth $26 billion? how does anyone think the public market could have been valuing

this stock so incorrectly? how does anyone believe there could be that much more value? do they have a new machine that can run on water, solar a cell phone killer, the next great device that will change our lives? here's what i think. i think we'll look back and say the winner is the one who doesn't get -- doesn't get dell. maybe michael dell himself. he should play steve miller here, no kidding, take the money and run. because to get dell at these prices is to risk losing everything. i've seen this happen where it was obvious everyone involved had lost their senses. mostly with the tribune core buyout. i know all three smart teams of people shouldn't be wrong. but the company is just not worth what they're willing to pay, unless they can somehow fire everyone, and still generate the exact same amount of revenue. that's about what it will take. and that ain't happening. stay with cramer. [ male announcer ] i've seen incredible things.

otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪ a new ride comes along and changes everything. the powerful gs. get great values on your favorite lexus models during the command performance sales event. this is the pursuit of perfection.

we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day... block the acid with prilosec otc

and don't get heartburn in the first place! [ male announcer ] one pill each morning. 24 hours. zero heartburn. do not forget the triple d. diana, dragonfly, doji. remember that? that's the inflexion point where a stock bottoms and then reverses. dsx for those who want speculation. for those who want some high growth, i'm giving you gilead. and, yes,